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Mark Carney extends term at Bank of England until 2020 to help steer economy through Brexit

Mark Carney will remain as Bank of England governor until the end of January 2020 after extending his term to help steer the economy through Brexit.

Mr Carney had been expected to step down in June 2019 but signalled last week his willingness to stay on in the role to ease the Brexit transition. A seven-month extension of his term will help avoid a shake-up at the Bank just months after Brexit.

The governor said he would "do whatever I can in order to promote both a successful Brexit and an effective transition at the Bank of England".

"I recognise that during this critical period, it is important that everyone does everything they can to support a smooth and successful Brexit."

Chancellor Philip Hammond said that Mr Carney had made the decision "despite various personal pressures".

The governor's term extension will rile Brexiteers angered by the Bank's intervention in the run-up to the EU referendum. However, it will help the Treasury avoid further rows over "any new governor’s Brexit slant and the diversity" of the Monetary Policy Committee, according to Oxford Economics.

The Treasury also extended the term of Jon Cunliffe, deputy governor for financial stability and one of the most dovish members of the Bank's Monetary Policy Committee.

Markets were largely unaffected by Mr Carney's decision to stay on with sterling unchanged following the announcement.

4:24PM

Gloomy mood on markets as China asks permission for sanctions on US

There is a gloomy mood on markets this afternoon as trade tensions come to the fore once again.

The FTSE 100 has resumed a three-week slide after China asked the World Trade Organisation for permission to hit the US with sanctions over anti-dumping duties.

David Madden CMC Markets explained that investors were heading for the exit because "the move by Beijing could trigger a reaction from president Trump".

The FTSE 100 has dropped 0.3pc, knocking it to a fresh five-month low.

3:48PM

Banks in 'full execution mode' over Brexit

Speaking of Brexit, some top banks have been grilled by MPs today.

US banking giant JP Morgan said it was in “full execution mode” preparing for Brexit, as banks press ahead with moving staff from the UK to the EU.

Post-Brexit flight risks

Air travel could grind to a halt after Brexit because of the European Commission's refusal to start talks about a new agreement on aviation, Britain’s aerospace industry has warned.

ADS, the body representing the sector, has written to the Commission repeating a warning that the industry’s complex and highly regulated nature means unless discussions are started now aircraft could be grounded.

The group has pointed out that the Commission’s refusal to start talks contradicts its own position set out in July advising all parties - regardless of whether a deal is agreed - to step up preparations and “take responsibility for their specific situation”.

Paul Everitt, chief executive of ADS, said the UK’s own Civil Aviation Authority (CAA) had already had “detailed talks” about potential problems with counterparts in the US, Canada and Brazil.

He added: “As long as the Commission blocks similar discussions... it fosters uncertainty and risks legal liability, insurance and passenger safety issues for the global aviation and aerospace industry.”

Carney extension will avoid rows over next governor's Brexit views

Mr Carney extending his term to January 2020 will help the Treasury avoid further rows over "any new governor’s Brexit slant and the diversity" of the Monetary Policy Committee, according to Oxford Economics.

But it argued that the consequences for interest rates from the decision are "minimal".

It explained:

"The Treasury’s keenness to keep Mr Carney in place (note that, in taking up the post in July 2013, he originally signalled that he would serve for five years, three years short of the standard eight-year term, before agreeing in 2016 to extend that tenure to June 2019), certainly offers benefits in terms of continuity and the retention of institutional knowledge."

2:13PM

North Sea ‘at a crossroads’ as drilling sinks to 55-year low

Oil and Gas UK’s annual economic report warned that the industry is “at a crossroads”

In the four years since oil markets began their descent into their deepest downturn ever, the North Sea has emerged with lower costs and rising flows of oil.

But a landmark industry report has cast doubt on the future of the North Sea as drilling work to tap new reserves plummets to lows not seen since 1965.

Oil and Gas UK’s annual economic report has warned that the industry is “at a crossroads” and urgently needs fresh drilling programmes to resuscitate its supply chain and safeguard hundreds of thousands of jobs.

Unreliable boyfriend commits to soothe Brexit worries

The "unreliable boyfriend" has finally committed and investors will take some comfort from the extension of his term, said Fidelity’s Anna Stupnytska.

Mr Carney will continue to "exert a more firmly dovish influence on UK monetary decision-making" and his policy will be "driven by how smooth or disruptive Brexit turns out to be", she added.

"Indeed, it is perhaps with regards to Brexit where Carney-continuity is more important, and why Theresa May was so keen to keep him on board."

1:20PM

Carney extension will 'provide continuity during Brexit'

Mark Carney's term extension is a "welcome development" and "should provide continuity in the approach to monetary policy during the Brexit transition", according to Silvia Dall’Angelo, economist at Hermes Investment Management.

She added that the decision would support "business and consumer sentiment at a delicate juncture for the country". Mr Carney's speech following the Brexit vote decision was credited with steadying the ship after prime minister David Cameron resigned from Number 10.

12:56PM

Carney extension will rile Brexiteers furious with his referendum intervention

An extension of Mr Carney's term will ruffle the feathers of Brexiteers who were furious with the Bank of England's intervention in the run-up to the Brexit vote.

Former UKIP leader Nigel Farage called the extension a "truly appalling decision".

The Bank predicted before the referendum that a Leave vote would knock the pound, lift unemployment and could lead to a recession. The pound has slid sharply following the decision but unemployment is at a 43-year low and growth has held up.

The Bank also came under fire for cutting interest rates following the decision. Some have argued that the emergency rate cut was unnecessary while the Monetary Policy Committee has insisted that the move helped the economy shake off any initial Brexit jitters.

Mr Carney has admitted that the Bank could be forced to cut rates again in a no deal Brexit scenario. Last month's rate rise to 0.75pc was widely seen as the Bank building ammunition ahead of next March.

12:39PM

Markets shrug off Carney term extension

Confirmation of Mr Carney's term extension has been shrugged off on currency markets with the pound barely flickering on the news.

An extra seven months of the Canadian remaining on Threadneedle Street does not move the dial on future interest rate decisions, currency traders have determined.

The Treasury also extended the term of deputy governor for financial stability Jon Cunliffe, one of the most dovish members of the Bank of England's Monetary Policy Committee. Mr Cunliffe will serve a second five-year term in the role.

12:29PM

Carney: I am willing to do whatever to ensure successful Brexit

The extension to Mr Carney's term is a relatively small one at just seven months but will help avoid a shake-up at the Bank of England just months after Brexit.

Mr Carney said that he is "willing to do whatever I can in order to promote both a successful Brexit and an effective transition at the Bank of England".

He added:

“I recognise that during this critical period, it is important that everyone does everything they can to support a smooth and successful Brexit. "

12:23PM

Mark Carney extends term at Bank of England until 2020 to help steer economy through Brexit

Bank of England governor Mark Carney will extend his term until the end of January 2020 to help steer the economy just after Brexit, chancellor Philip Hammond has confirmed.

Mr Carney was expected to leave Threadneedle Street next June but Mr Carney said last week that he had signalled his willingness to stay on to ease the Brexit transition.

12:15PM

FTSE 100 struggles as China readies plan to escalate trade dispute

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The pound's recent resurgence could push the FTSE 100 back into correction territory in the coming weeks.

The FTSE 100 has dropped a further 0.5pc, leaving it 8pc down from May's record high. A correction is when stocks plunge more than 10pc from an index's 52-week high.

Trade war worries are dragging European markets lower this afternoon. Reuters has reported that China will escalate the spat next week by asking the World Trade Organisation for permission to impose sanctions on the US following a dispute over dumping duties. An anti-dumping duty is a tariff on foreign imports that it deems below the fair market value.

11:34AM

Ashtead plans bigger share buyback but braces for pay revolt

Ashtead hires out equipment to the construction industry

A larger-than-expected stock buyback and a forecast-beating outlook have sent shares in plant hire company Ashtead spiking.

Investors piled into the FTSE 100 group in early trading, sending its shares up more than 6pc, the biggest rise in a year, after it set out a strong quarterly performance.

The chairman of Debenhams, Sir Ian Cheshire, has hit back at reports that the retailer is on the brink of closing stores and drawing up emergency plans to rescue the business.

Sir Ian said that the department store chain brought forward its trading statement to Monday because "we saw this sort of circus develop over the weekend".

Speaking on BBC Radio 4's Today programme, he said: "The only analogy I can have to it is like having a bunch of nosy neighbours watching your house. Somebody sees somebody in a suit going into a room.

Stuttering job creation figures mean that the Bank of England will not feel "compelled to dampen the recent upturn in wage growth by raising interest rates again soon", he added.

10:07AM

Wages excluding bonuses hit joint-highest in three years

Regular wage growth excluding bonuses hit its joint-highest level in three years in July.

However, economists usually focus on wages with bonuses as many pay packets are bolstered by commission and performance-based pay.

Andrew Wishart at Capital Economics believes that the "competition for workers is finally starting to provide greater support to wages".

He added that surveys on wage growth "suggest that it will sustain a pace of about 3pc over the remainder of the year".

9:52AM

Low unemployment could be feeding through to pay

Ultra-low levels of unemployment could be finally feeding through into pay packets.

The Philips Curve predicts that low levels of joblessness will result in a surge in pay and subsequently inflation. Less workers available to fill roles leads to more competitive pay, which then lifts prices.

Wage growth climbed for the first time in eight months in the three months to July, rising to 2.6pc, while unemployment remained at a 43-year low.

9:42AM

Wages climb for first time in six months but labour market finally shows signs of slowing

Wage growth climbed for the first time in six months in July but the UK's buoyant labour market finally showed signs of slowing.

Just 3,000 jobs were added to the UK economy, an eight-month low, while pay unexpectedly pushed ahead of inflation.

The uptick in pay briefly boosted the pound to a 0.4pc gain against the dollar at $1.3080 but it quickly pared its gains.

9:28AM

Hong Kong's Hang Seng tumbles into bear market

The Hang Seng, Hong Kong's blue-chip index, has slid into a bear market as stocks in Asia continue to be battered by fears of slowing growth in China, the emerging markets rout and China's tariffs spat with the US.

A 0.7pc loss on another bout of emerging market jitters tipped the index into a bear market - when stocks drop more than 20pc from an index's 52-week high.

Hussein Sayed at FXTM warned that the risks in emerging markets have not disappeared despite the "slight return in appetite" for stocks yesterday.

He added:

"Emerging markets are still vulnerable to further shocks, and the U.S.-China trade dispute is likely to escalate further in the coming days. This makes it difficult for investors to make up their minds on whether to begin purchasing oversold potential stocks or wait longer for clarity on how U.S.-China relations resolve."

9:10AM

Booming overseas business helps JD Sports defy high street downturn

JD Sports saw a surge in profits and revenues in its first half

JD Sports’s fast-growing overseas business helped the sportswear seller defy a downturn on Britain’s high streets to post booming profits.

The strong numbers came on the back of dozens of new stores in mainland Europe and Asia. It was also bolstered by the £400m takeover earlier in the year of US giant Finish Line, which has hundreds of concessions in Macy’s department stores as well as its own shops.